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Mr. Tom Clarke (Coatbridge and Chryston): Does my right hon. Friend accept that the House will warmly welcome his proposals? Can he tell us whether the G7 countries and the other important international concerns with which he has been in consultation have agreed with the measures that he has announced in the document that he said he would publish this afternoon?

On the subject of Peru, which was mentioned by my hon. Friend the Member for Linlithgow (Mr. Dalyell), can my right hon. Friend tell the House whether the new President, Toledo, is prepared to co-operate in a way that his predecessor, Fujimori, despite his experience of the terrorist organisation Shining Path, was unable or unwilling to do?

Mr. Brown: I shall write to my right hon. Friend about that point, as I shall write to my hon. Friend the Member for Linlithgow (Mr. Dalyell), who raised it previously, and I shall look at the papers affecting Peru, to which my attention has been drawn.

On international co-operation, there is no doubt that there has been an increased willingness to co-operate to tackle the sources of terrorist finance. That co-operation means that Germany has just set up a economic crime unit; the Americans have an asset-tracking centre, which has been set up since 11 September; France has issued, and will issue in more detail in the next few days, its action plan to combat financial terrorism, and the Japanese authorities have said likewise, so there is a degree of international co-operation that had not been in existence in this area before, and there is a determination that we will exchange information internationally so that we can deal with the problems. It is, of course, important that centres where little action has been taken in the past are the subject of further scrutiny. That is why we want the financial action taskforce to set down at the end of the month new rules on the financing of terrorism that all countries must apply.

Angus Robertson (Moray): On behalf of the Scottish National party and Plaid Cymru, may I welcome the announcement of measures to cut off the supply of funds to terrorism? Clearly, such action is necessary and timely. May I also thank the Chancellor and the Home Secretary for providing copies of their statements?

Does the Chancellor recall that the Financial Services Authority said in March that it had found that 23 British banks had happily handled the money of the late Nigerian

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dictator General Sani Abacha and reported that 15 of them had significant control weaknesses in their anti-laundering rules? Is he confident that the measures announced today will make such cases, which involve state terrorists and murderous dictators, impossible in future?

Mr. Brown: That is our intention. As I mentioned in reply to a previous question about exactly the same matter, the power that we now have to require financial institutions to report to the authorities when there are reasonable suspicions about the possible use of funds for terrorist purposes, as well as the power to freeze money, were not available when the authorities were originally dealing with the Nigerian case. I accept what the hon. Gentleman says about the 23 banks that were named. He might also note that we have offered official assistance to the Nigerian authorities to help them in the recovery of money. That is currently a matter for judicial review, so I cannot, of course, comment on the outcome. We are not only taking legislative measures to deal with potential problems but offering assistance to the Nigerian authorities in dealing with their current problems.

Ann Clwyd (Cynon Valley): I welcome my right hon. Friend's statement, especially as the Select Committee on International Development identified in a report on corruption published in March many of the issues that he has raised. In particular, it dealt with the Abacha issue, money laundering and so on. On money laundering, the Committee concluded on the basis of the evidence given to us that there was gross under-reporting of suspicious transactions among professionals such as lawyers and accountants. Will he reassure us that people who refuse to report such transactions will be caught by the legislation that he is proposing?

Mr. Brown: As my hon. Friend has shown, one of the problems is that there is currently no international obligation for financial institutions to report suspicious transactions. The tightening up that has occurred in Britain has not yet taken place in other countries, but we are determined that it should happen. My hon. Friend may note that the second European Union money laundering directive is now the subject of debate in the European Parliament. The directive would require lawyers, accountants and other financial practitioners to report suspicious transactions. If it were agreed to, it would represent a tightening up of the law throughout Europe. I urge the European Parliament to introduce it as quickly as possible.

Mr. John Baron (Billericay): As part of the Government's anti-terrorism measures, does the Chancellor intend to release additional moneys to allow a substantial increase in police numbers? As we all know, any legislation that is passed by the House is worth while only if it can be enforced on the ground. We know that our police forces are overstretched and that crime is increasing. I believe that the additional burden of anti-terrorism measures, together with progress on increasing security—sadly, this will become a fact of life—means that we need a step change in our policing levels.

Mr. Brown: I did not think that the first call to be made today for more money would come from the Opposition Benches, but indeed it has. We have said that we accept

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that, where security issues, international development responsibilities and the defence and military requirements of what is happening in Afghanistan cause additional resources to be required, that will be a priority for the Government. The hon. Gentleman may have noted that we said that additional resources would be available for NCIS. We also said that they would be available for special branch and its investigative resources. We are increasing Home Office expenditure and expenditure on the police by around 6 per cent. in real terms this year and next year. Of course, we shall continue to examine legitimate claims.

Mr. Jim Cousins (Newcastle upon Tyne, Central): My right hon. Friend knows that the House is with him when he says that the concealed ownership of bank accounts and companies can hide crime. However, he also knows that NCIS already receives 15,000 reports of money laundering a year and attempts to tackle them with a staff of 30. Each member of a police fraud squad deals with, on average, three to four live cases with a value of almost £1 million. Customs and Excise investigation and fraud teams are considering a major programme of job losses. Will my right hon. Friend assure hon. Members that the capacity will exist to implement the new laws that he proposes?

Mr. Brown: I shall outline two of the improvements that are being made at the request of the various services that form NCIS. First, there will be greater co-ordination, and the services will be put in the position of being able to work better and more closely together.

Secondly, we want better asset-tracking intelligence to enable us to distinguish between a suspicious transaction report, which, for example, claims that an additional amount of money was put in a bank account for something of no particular consequence, and the alternative—tracking the assets of terrorists. We want intelligence to be available that will allow us to distinguish between the important and the unimportant. After that has been done, it will be possible to say that many of the cases that are passed on for investigation give the police a clear lead about what they need to do. Of course, we will consider the resources that are necessary to ensure that the service is done well.

Mr. Edward Davey (Kingston and Surbiton): We all agree about the difficulty of gaining international agreement on sanctions against financial centres that are not prepared to clean up their act. For what measures to sanction those countries will the British member of the financial action taskforce press.

Mr. Brown: When the financial action taskforce made its original recommendations, it named several countries that had to bring their practices into line with the accepted standard for the international community. We gave those countries until 30 September to do that. Action against them, and appropriate future action will be considered at the meeting in October.

Every financial centre that refuses to operate in a way that fulfils international standards will increasingly be outlawed from the rest of the international community. We will lead the calls for the behaviour of centres that do

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not follow the rules, proper procedures and agreed international standards to be perceived as unacceptable, and for them to lose business increasingly as a result.

Mr. Ian Davidson (Glasgow, Pollok): I welcome the Chancellor's drawing of links between terrorism, drugs, crime and associated problems. However, there is a major omission from the list: tax evasion. It would be helpful if my right hon. Friend extended his powers to cover that. Does he accept that there should be no undue restrictions on the search for financial information and that trawls, which should be carried out, would uncover many links between the different problems?

Would my right hon. Friend also consider amending the current balance between penalties and rewards for those engaged in money laundering? The profits are enormous and the penalties, especially for lawyers, accountants and bankers in the City of London and elsewhere who assist terrorists to hide their money, are slight. Does he agree that publicly hanging a couple of lawyers would greatly assist with concentrating the mind?

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